"Some in our country think that Social Security is a trust fund -- in other words, there's a pile of money being accumulated. That's just simply not true. The money -- payroll taxes going into the Social Security are spent. They're spent on benefits and they're spent on government programs. There is no trust. We're on the ultimate pay-as-you-go system -- what goes in comes out. And so, starting in 2018, what's going in -- what's coming out is greater than what's going in. It says we've got a problem. And we'd better start dealing with it now. The longer we wait, the harder it is to fix the problem."

Social Security as it now exists will provide future beneficiaries with the equivalent of a dismal two percent real rate of return on their investment, yet the system is headed for insolvency. Our new approach honors our commitment to Social Security by reserving every dollar of the Social Security payroll tax for Social Security, strengthening the system by making further necessary reform feasible.

Chairman Greenspan has warned against such Government involvement in private financial markets: "Having the Federal Government hold significant amounts of private assets would risk suboptimal performance by our capital markets, diminished economic efficiency, and lower overall standards of living than would be achieved otherwise."

He went on to recommend that the U.S. Government should consider cutting taxes and setting up a system of personal savings accounts within Social Security to pre-empt such a development. He stressed that such a strategy should begin early, well before the date of impending "excess cash" accumulation, so that drastic action is not needed in any one given year.

The Administration's Budget does just what Chairman Greenspan recommends. It continues to pay down a historic amount of debt at a record rate as long as practicable. However, it also lays out an agenda for gradually reducing the on-budget surplus in order to minimize the risks of a build-up in excess cash and Government purchase of private assets in the future. Even with its tax cut, the Administration still projects that $1.3 trillion in excess cash will remain in 2011. This cash would be available for Social Security reform and other priorities.

Thus, the Administration's Budget shows that it is possible to effectively pay off the debt, deliver meaningful tax relief and address needed priorities, while preserving nearly a trillion dollars as protection against uncertainties. Such policies will help to shore up the Nation's long-run economic and fiscal outlook, and will allow the Nation to translate today's good news into good news for future generations as well.